In recent weeks, flat steel prices have decreased in the Italian domestic market, losing about €20/mt ($25/mt) compared to the beginning of October, as SteelOrbis has been informed by market sources. Currently, domestic producers' base prices in Italy are at €400-410/mt ($500-510/mt) for hot rolled coils (HRC), €470-480/mt ($588-600/mt) for cold rolled coils (CRC) and at €450-460/mt for hot dip galvanized (HDG) coils, all ex-works.
Sources define the Italian flat steel market as very weak for reasons such as the weak economic performance of the country, scarce orders, reduced exports, the decline in raw material costs and the absence of an increase in domestic consumption, but also because of a deterioration in sentiment due to the approach of the end of the year. At the distribution level, the crisis in the end-user market is acutely felt and leads to a further increase in competition between local service centers. In recent weeks, these service centers, against the background of a stronger price position held by local producers, had offered greater resistance to price increases. This attitude was justified by the fact that profit margins were and remain highly compressed.
Meanwhile, although at the moment import volumes have remained low in Italy (reflecting the weakness of the end-user market), an increase in arrivals is possible in the early months of next year. In particular, the threat of a strong inflow of Chinese materials hangs over local CRC prices like a sword of Damocles.
Currently, most market operators are adopting a cautious approach. They hope that prices will not fall further in the remainder of the year, but much will depend on the dollar and pressures from the global market. Sources interviewed by SteelOrbis have pointed out that the gap between flat steel prices in Germany and prices of the corresponding materials in Italy has become tighter, especially in the last week. At present, market sources do not foresee any brilliant recovery in prices for the coming year, especially because of the negative predictions concerning global prices of iron ore.
Meanwhile, in the Italian domestic market, flat steel inventories are below normal levels at local traders, while they are even lower on the producers' side, amid the caution which prevails in the market.